What is an RDSP?
A Registered Disability Savings Plan (RDSP) is a government-registered savings program designed to help Canadians with disabilities and their families save for long-term financial needs, including future living expenses, medical and healthcare costs, education, quality of life improvements and estate planning. Similar to an RRSP, an RDSP allows savings to grow tax-deferred until withdrawn. Contributions to an RDSP can vary from year to year, with no set annual contribution limit.
Contributions can be made until the end of the year the beneficiary turns 59. While contributions are not tax-deductible, eligible beneficiaries may qualify for government assistance through grants and bonds to help grow their savings. Anyone can contribute to an RDSP with written permission from the plan holder.
An RDSP is intended to provide long-term financial security for a person who receives the federal Disability Tax Credit. The funds can be used to support the beneficiary’s needs and goals, helping enhance financial independence and quality of life over time.
Why choose an RDSP?
Tax-deferred growth
Contributions and grants grow tax-deferred.
A significant advantage of a RDSP is the tax-deferred growth on your contributions and government grants/bonds.
Government assistance
Grants and bonds help your savings grow faster.
The government provides grants and bonds to help your savings grow faster.
No annual maximum
Contribute up to $200,000 over your lifetime.
Contributions can be made to the RDSP up to a maximum lifetime limit of $200,000, and these contributions can continue until the end of the beneficiary's 59th year.
How does it work?
To open an RDSP, the beneficiary must be eligible for the Disability Tax Credit as determined by the Canada Revenue Agency (CRA). The plan can be opened by the individual with the disability, a parent or a legal guardian who manages the account on behalf of the beneficiary.
Contributions can be made by the account holder, family members, friends or anyone with permission from the account holder. One of the key benefits of an RDSP is access to government assistance through the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB), which can help grow savings over time.
The Canada Disability Savings Grant is a matching contribution from the federal government based on the beneficiary’s family income and contributions made to the plan. Depending on income, the government may match contributions at 100%, 200% or 300% on eligible amounts. Additional matching support may also be available for lower-income beneficiaries.
The Canada Disability Savings Bond provides government contributions to eligible low-income individuals with disabilities. No personal contributions are required to receive the bond, and eligible beneficiaries may receive up to $1,000 annually depending on family income.
Funds from an RDSP can be withdrawn when needed, but withdrawals may be taxable. Contributions can be made until the end of the year the beneficiary turns 59. Starting at age 60, the beneficiary will receive regular payments from the RDSP, known as Lifetime Disability Assistance Payments.
Is this right for you?
Right for you if:
- You or the beneficiary is eligible for the Disability Tax Credit. To open a RDSP, the beneficiary must be eligible for the Disability Tax Credit.
- You'd like flexibility when it comes to the use of funds. RDSPs can be used for various purposes to enhance quality of life for the beneficiary, from medical costs to living expenses
- You want tax-deferred growth. Offering tax-deferred growth on your contributions and government bonds/grants, RDSPs can help grow your investment more quickly over time compared to taxable accounts.
May not be right for you if you:
- You're ineligible for the Disability Tax Credit. If you/the beneficiary doesn't qualify for the Disability Tax Credit, you cannot open a RDSP.
- You have short-term financial goals. If you have short-term financial goals and don't plan on using the RDSP for long-term savings, it may not be for you. RDSPs are designed for long-term financial security and may not provide immediate benefits for your short-term needs. Consider something like a mutual fund instead.
Tools to help you reach your goals.
Common questions.
Here’s what people ask us the most.
-
To open an RDSP, the beneficiary must be eligible for the federal Disability Tax Credit (DTC). The plan can be opened by the person with the disability, a parent or a legal guardian who manages the plan on behalf of the beneficiary.
-
Yes. Eligible RDSP beneficiaries may receive government assistance through the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB). These grants and bonds can help increase the amount saved in the plan.
-
Yes. RDSP funds can be withdrawn to support the beneficiary’s needs, but withdrawals may be taxable. Once the beneficiary turns 60, they begin receiving regular payments from the plan called Lifetime Disability Assistance Payments.
-
RDSP funds are intended to support the long-term financial security of the beneficiary. They can be used for expenses that improve quality of life, including living costs, medical and healthcare expenses, education and other future needs.
-
No. Contributions made to an RDSP are not tax deductible. However, savings can grow tax-deferred while they remain in the plan, and eligible government grants and bonds can help increase the value of the account.
We're here to help.
Not sure which investment option is right for you? Our advisors can help you understand your choices, explore different options and create a plan that fits your goals and financial situation.
